India on Friday launched a new oil and gas exploration bid round, hoping to attract USD 300-400 million investment in discovering hydrocarbon reserves in the country.
As many as 21 blocks or areas are on offer in the Open Acreage Licensing Policy (OALP) Bid Round-VI, which will close for bidding on October 6, an official press statement said.
India is 85 per cent dependent on imports to meet its oil needs and finding newer reserves through exploration rounds like OALP-VI will help cut that reliance.
The 21 blocks are spread over 11 sedimentary basins and 9 states covering 35,346 square kilometres of area. Of these, 15 blocks are onland, 4 lie in shallow waters and two are ultradeep sea.
“It is expected that this bid Round-VI would generate immediate exploration work commitment of around USD 300-400 million,” the statement said.
The government has so far conducted five bid rounds since the Hydrocarbon Exploration and Licensing Policy (HELP) was launched in March 2016. The last bid round, where 7 blocks were offered, was launched in August 2019 and closed in January 2017.
In the previous five bid rounds, 105 blocks for exploration of oil and gas were bid round. Of these, billionaire Anil Agarwal’s Vedanta Ltd walked away with 51, the bulk of it in the very first round. State-owned Oil India Ltd (OIL) won 25 and Oil and Natural Gas Corporation another 24.
The 105 blocks spanning to an area of around 156,580 sq km in over 17 Sedimentary Basins of India attracted total committed investment of around USD 2.378 billion,” the statement said.
Under OALP, explorers can identify any area outside of the ones that are already with some company or other, for prospecting of oil and gas. The areas identified are to be clubbed twice a year and offered for bidding. The firm identifying the area gets a 5 point advantage.
This policy is different from the past where the government identified areas and offered them for bidding. Allowing explorers to choose an area based on their assessment of prospects are going through geological data given them a lot more freedom to demarcate and identify blocks.
While blocks in Category-I basins are awarded to a company offering the highest share of the revenue from oil and gas produced, those in Category-II and III are bid out to those offering maximum exploration or investment commitment.
Category-I basins have established reserves and fields that are already producing while Category-II basins are ones that have contingent resources pending commercial production. Category-III basins are ones that have prospective resources awaiting discovery.
In the current round, 12 blocks lie in Category-I basins while 4 are in Category-II and the remaining 5 in Category-III.
Features of OALP round include reduced royalty rates, no oil cess, uniform licensing system, marketing and pricing freedom and revenue sharing model.
Exploration rights are offered on all retained area for full contract life, it said adding concessional royalty rates apply in case of early commercial production.
There is no revenue sharing in Blocks falling in Category II and III Basins except in the case of windfall gains.